[Click eStock] "Seohung, Q3 Results Below Expectations... Target Price Down"

[Asia Economy Reporter Park Jihwan] Ebest Investment & Securities lowered the target price for Seohung to 60,000 KRW on the 12th, citing third-quarter results below expectations this year. This reflects a 14.6% downward revision in next year's operating profit forecast due to the third-quarter results falling short of expectations. However, the investment rating was maintained as a buy.

Researcher Jeong Hongsik of Ebest Investment & Securities stated, "In the third quarter, sales were 144.8 billion KRW, the same as the previous year, but operating profit decreased by 41.0% to 11.7 billion KRW." Net profit also sharply declined by 31.8% to 8.4 billion KRW. All of these results significantly missed previous estimates.

Researcher Jeong explained, "Sales remained flat compared to the previous year, which is understood to be due to production disruptions caused by COVID-19 issues at the Vietnam factory." He analyzed, "The sharp decline in operating profit appears to be due to increased export costs for hard capsules caused by rising maritime freight indices, rising raw material prices, and production disruptions leading to reduced profitability."

However, a recovery is expected in the fourth quarter, indicating that the performance bottom has passed. Researcher Jeong said, "Ten additional hard capsule production facilities are being added at the Vietnam factory, so positive results are expected next year."

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